Composites of poly(ε‐caprolactone) (PCL) and molybdenum sulfur iodine (MoSI) nanowires were prepared using twin‐screw extrusion. Extensive microscopic examination of the composites revealed the nanowires were well dispersed in the PCL matrix, although bundles of Mo6S3I6 ropes were evident at higher loadings. Secondary electron imaging (SEI) showed the nanowires had formed an extensive network throughout the PCL matrix, resulting in increased electrical conductivity of PCL, by eight orders of magnitude, and an electrical percolation threshold of 6.5 × 10−3 vol%. Thermal analysis (DSC), WAXD, and hot stage polarized optical microscopy (HSPOM) experiments revealed Mo6S3I6 addition altered PCL crystallization kinetics, nucleation density, and crystalline content. A greater number of smaller spherulites were formed via heterogeneous nucleation. The onset of thermal decomposition (TGA) of PCL decreased by 70°C, a consequence of the thermal degradation of Mo6S3I6 to MoO3, which in turn accelerates the formation of volatile gases during the first stage of PCL decomposition. Copyright © 2010 John Wiley & Sons, Ltd.